CEO of THOR Associates, Fern Lee, has been spanning the nation working with clients for Results, ROI and Revenue. In the link above, Fern shares thought leadership on attribution and the need for building infrastructure that will support and refine models for aggregating data.
RECT RESPONSE MARKETING
Response Advisors Forum: A Long Run … and a Short Sprint
1 Mar, 2016
By: Thomas Haire
Expected record-level spending on the yearlong presidential campaign and August’s Summer Olympics present well-worn challenges. How will performance-based marketers respond? The Response Advisory Board’s full answers are in this Web Exclusive version of the story!
Every four years, marketers are faced with the same double-whammy that affects not only media availability but also consumers’ attention spans — the U.S. presidential election and the Summer Olympics. However, though 2016 presents many of those same challenges, the expansion of technological capabilities in the hands of performance-based marketers adds both complexity and opportunity.
With estimates of 2016 political advertising spending ranging from $6 billion (Wells Fargo Securities) to as much as $11.4 billion (Borrell Associates), there’s no doubt that this election cycle will break spending records during the first 11 months of the year.
“The Republican field began with 16 candidates and through the early primaries, the pack has thinned,” says Peter Koeppel, president of Dallas-based Koeppel Direct. “By Super Tuesday, March 1, it is likely that the herd will be reduced further, with an additional Democratic candidate or two also dropping out. That will certainly reduce the amount of money being spent directly by candidates as well as the PACs supporting them. The question is, will those dollars shift to the remaining viable candidates and continue to suck up more media inventory or will more airtime be available to direct advertisers as the leading candidates emerge?”
In August, most estimates put ad spending on NBCUniversal networks’ coverage of the Summer Olympics at more than $1 billion — and vast swaths of viewers are expected to forsake their usual viewing habits (and favorite networks) in favor of watching the world’s top athletes go for gold.
How will these issues affect the marketplace for performance-based marketers? Richard Stacey, president and CEO of Toronto-based Northern Response Intl. Ltd., answers, perhaps only half jokingly, “Whatever happens, Donald Trump will always have a great second career as a DRTV pitchman. He could be the next George Foreman!”
What do he and other members of the Response Advisory Board think about these 2016 challenges? We asked — and many answered — for this, our first quarterly edition of the 2016 Advisors’ Forum.
What expertise could performance-based/direct response experts add to political advertisers’ arsenals?
Doug Garnett, Atomic Direct: There are many lessons political advertisers could learn from performance-based advertising. They’d especially do well to learn from our ability to make messages concrete and valuable — something many political ads lack.
That said, the primary challenge facing performance-based ads is that we need a message that inspires viewers to respond. Online, those kinds of political campaigns do well with click bait, asks for donations, or conversation starters. But it’s harder to create a reason to respond to a political ad that’s on TV. I doubt we’ll see a CTA where the candidate looks into camera and says “Call now to invite me into your home.”
As in the past, political candidates could gain by leveraging DRTV’s longer formats. Some stories — like those that introduced us to President Obama — should be told in long-form.
Linda Goldstein, Manatt Phelps & Phillips LLP: One of the more interesting aspects of this year’s political campaign is the precision with which candidates are seeking to target very specific segments of the market. Performance-based marketers and direct response experts have been perfecting the art of targeted marketing for years. Their precise knowledge of how to best target specific segments of the community could be a real asset to political advertisers.
Peter Koeppel, Koeppel Direct: DRTV’s longer lengths would seem tailor made for candidates who want more time to distinguish their positions. And yet, with rare exceptions such as Ross Perot’s third-party run in 1992 and Barack Obama’s infomercial “event” right before the election in 2008, there has been scant use of the infomercial or other, longer commercial lengths. Given the expertise the industry has in storytelling, there is an enormous opportunity to engage with voters. Such content can be repurposed across social media and digital advertising in shorter chunks so that all of it works hand-in-hand to convey a candidate’s message.
Fern Lee, THOR Associates: Since performance-based marketing experts are driven by data, there definitely could be the opportunity to work together. Performance-based marketers have a deep understanding of viewer demographics, media consumption habits, cross-device interaction, responsiveness trends, and rate efficiency thresholds that can be very beneficial to political advertisers to help guide placements, tactic mix, and budget thresholds.
Kevin Lyons, Opportunity Media/A&E: Each time we have a national election, there is a huge amount of advertising leveraged against it. There is a great opportunity for performance-based marketing expertise. Having greater accountability on results creates better efficiencies, enabling political advertisers to spend their budget more wisely. Whether they listen to the advice is another story.
Richard Stacey, Northern Response Intl. Ltd.: Performance-based marketing begins with establishing clear objectives and then clearly defining metrics and reliable systems to measure them in an accurate and timely manner. This process can be used in political marketing just the same as it can be to sell a pair of shoes online.
Robert Yallen, InterMedia Group of Companies: There are opportunities, and political and issue advertisers should change their media tactics and strategy to take advantage of them. They can follow the successful path taken by numerous general advertisers who initially ignored direct response strategies and tactics but now include a DR approach in both creative and media.
Political and issue category advertisers should include at least a portion of their offline and online spending on direct response media, as well as performance-based media. In its purest form, this category aligns itself with direct response in the sense that these advertisers want to get information in the hands of decision makers, then ask them to take action by voting for their candidate or initiative.
In addition to ratings, impressions, reach, and frequency, political and issue advertisers need to think of results in terms of traditional DR cost-per metrics. Basically, they need to determine how much can they “profitably” spend on obtaining a single vote for their cause, and then model the entire process.
Both unwired media networks and performance-based advertising can and should play important roles within the mix. Both serve as a hedge against overpricing, as they have the capability to deliver substantial media weight to a campaign at below-market cost-efficiencies. As a result, a savvy political advertiser can generate significant extra impact — and results — while remaining within its budgeting parameters.
Most projections show 2016 will be the most expensive campaign season ever. While those record numbers include TV, the expansion of digital advertising will be even more powerful. What effects will this massive expenditure have?
Abed Abusaleh, Havas Edge: Nationally, the full impact won’t be felt until after the Republican and Democratic conventions. Locally, major battleground states like Ohio, Florida, Nevada, Pennsylvania, Indiana, North Carolina, Missouri, and Michigan will see extremely tight inventory levels starting in the fall. Unless a major candidate or PAC creates long-form content, the impact will only be felt on short-form.
Than Merrill, FortuneBuilders.com: According to IHS Inc., a global research firm, the amount of money companies intend to allocate towards advertising this year is expected to grow by as much as 5.7 percent worldwide. That said, 2016 might be the first year advertising spending eclipses the half a trillion dollar mark across the globe. And for what it is worth, the United States is setting the pace. Some estimates place political ad spending for the upcoming presidential election somewhere around $6 billion. Such a lofty expenditure will likely resonate on a local level, impacting the advertising budget of businesses everywhere.
In particular, one fundamental principal is expected to render our previous expectations on advertising spending moot: supply and demand. There is no reason to believe local broadcast inventory won’t be tight because of the ads that are going to run during the 2016 presidential election. Ad space, or a lack thereof, will make it more difficult to increase brand awareness for companies of all sizes. Remnant media — often the cheaper media available because it is pre-emptible — will be particularly hard hit in swing states because political spending will always pay more and “bump” the original advertiser out of their spot.
If for nothing else, the scarcity of advertising space is going to increase the amount businesses must spend to implement a direct response marketing campaign. With political spending expected to shatter records this year, especially in swing states, ad inventory will come at a premium. The remaining ad space will become a commodity of sorts — only available to the highest bidder.
Some experts have already predicted that running a local television ad will cost 13 percent more than this time last year. Digital advertising, on the other hand, will remain relatively unscathed. Online video expenditures are not subject to the same laws of supply and demand, as “online real estate” is vastly abundant. However, that’s not to say it too won’t increase. While not nearly as inflated as its television counterpart, online videos are expected to cost a modest 1 percent more than last year. As a result, expect spending on Internet advertising to continue to increase.
Smaller businesses intent on running a direct response advertising campaign may find it difficult to compete on the same level as larger companies. The cost of running a simple television ad is simply too inflated to justify a promising return on investment. Smaller companies are probably better off leaving their marketing efforts to the Internet, or other sources that are less likely to host the barrage of political advertisements we are expecting.
Garnett: When we look back at past political seasons, we should conclude that campaigns are already spending so much that with every additional dollar they’re getting less and less. The shift from “not advertising” to “advertising” can have huge impact. But increased spending eventually saturates the ad market so it ends up taking $1 million of advertising to get the improvement you used to get from $100,000.
So this year I expect, as we saw in 2012, the massive expenditure will have far less actual impact than one might expect. That said, TV, online, radio, print, etc., will have important roles to play in campaigns when used effectively.
Goldstein: Barack Obama was the first national candidate to successfully use digital media as an essential component of his grass roots campaign in 2008. Since then, the growth of social media has been exponential as brand marketers have discovered just how powerful a tool social media can be for increasing consumer engagement. We can expect the candidates to take a page out of the brands’ playbooks and that social media will pay as powerful a role in this election as traditional broadcast advertising.
Koeppel: Massive political spending will create more clutter and competition for the consumer’s attention, but I suspect voters will grow tired of the ceaseless barrage of political messaging. There have been more debates and more focus on this presidential election cycle than ever before, owing no doubt in part to Donald Trump’s colorful candidacy. The real question is: will the American voter grow weary of it all as the election cycle unfolds? And given the degree of cynicism apparent in our society, will marketers reap any benefit from consumer confidence or optimism that can accompany the prospect of change? With threats of terrorism, a jittery stock market, the risk of another housing bubble bursting, and unbridled anger aimed at Washington and Wall Street, our economy is shaky. It remains to be seen whether retail therapy will be the balm that soothes society.
In terms of available inventory, local campaigns for candidates and initiatives will likely drive up rates for airtime and create inventory shortages in individual markets. On the national level, PACs will spend so-called soft money on lightning rod issues such as gun control, abortion, and Supreme Court assignments in an effort to drive candidate support. These sorts of issues serve as shortcuts for making voting decisions, and I anticipate they will adversely affect available inventory for direct advertisers.
Lee: There will be fairly significant changes in availability and rate structures of certain media throughout the political window. We have already begun to see a decline in inventory and an increase in rates across the news networks. And, overall, national media will be impacted during key time periods — e.g., pre-convention, throughout the primaries and leading up to the election, as well as PAC/issue marketing flooding the airwaves. These dollars will extend past the news networks and begin to impact Tier 1 properties (given their reach) and niche properties (given the targeted viewership). Local advertising will be impacted by primaries and cause/issue related advertising. Primary-related impact will typically be over a shorter window, based on primary locations and dates. Cause/issue related advertising will likely extend over a longer period of time, given what we’ve seen in the past. Digital advertising shouldn’t be impacted like TV, given the abundance of available impressions and sites.
Lyons: With hundreds of PACs and a tight primary run, this year should set records in terms of political issue advertising. The effect will be greatest felt at the local level, where inventory will tighten dramatically for direct response marketers. On a national level, the effect will be there, but not nearly as severe, due to a myriad of factors.
Stacey: An increase in political advertising spending will temporarily drive up rates and crowd out performance-based marketers.
Yallen: While there will surely be more digital advertising this year than ever before, both in terms of the numbers of ads and the digital channels engaged by candidates, this increase won’t have the same effect on digital inventory that political advertising has on TV availabilities. This is because digital inventory is basically unlimited, whereas TV has a fixed number of airtime available each hour.
The real battle within the political search-advertising arena will be impacted by fierce competition among campaigns for strategic keywords. This will also be the case for programmatic buying, as multiple campaigns battle for access to targeted consumer profiles that key on both committed voters and those inclined to switch their votes.
And while digital advertising will play an expanding role in political campaigns’ media mix, it will likely remain as a support medium for many of the upcoming battles. Digital’s primary value is for engaging audiences younger than 50. While this segment of the population makes up the bulk of the potential electorate, in actuality it’s the over-50 audience that represents the majority of adults who vote in every election. And, this segment remains easier, and more cost-efficient, to reach and motivate via television advertising.
Under-50 voting tends to be driven more by specific issues, or the candidates that support them. These are the areas where social media, and other related, recent technological advancements, have become even more powerful tools. They have proven highly effective in recent election cycles for both engaging potential voters on additional levels, and especially, for turning out the vote.
How has the expansion of TV/cable networks and channels helped political advertisers in recent years?
Abusaleh: Segmentation and channel expansion has allowed political advertisers to get more targeted in their messaging and media profile. In 2008, Barack Obama used a very specific group of stations to reach the 18-24 demo with his messaging about financial aid for college and extension of the length kids could stay on their parents’ insurance. Both ad campaigns helped him gain more than 65 percent of that demographic. It’s still up in the air as to what the key demo target groups will be, but once decided, almost certainly they’ll use the targeted networks to get their message across.
Garnett: The evolution of TV has created more and more lower-cost opportunities to get your messages out. It also gives candidates the opportunity to direct their TV advertising to specialized audiences. However, from what I can see, much of the buying is directed through traditional planning. So whether a candidate takes full advantage of the opportunity depends on their staff’s expertise at maneuvering the new media landscape.
Koeppel: Obviously, it creates more platforms for messaging, but it also adds to media and audience fragmentation. The primary benefits are the increase in available media inventory and the ability to reach smaller, yet more targeted, audiences.
Lee: Absolutely, while the increase in networks and channels is causing viewer fragmentation, the ability to more finely target prospects has increased. This allows for customized messaging to be developed and implemented, along with daypart targeting, and tailoring the call-to-action (CTA) to speak to the responsiveness and cross-device consumption based on the viewer. And the improved technology has had an impact on tactics such as addressable TV, programmatic TV, and DAI to limit waste and pivot messaging based on the viewer/political climate. Additionally, DirecTV/DISH joined forces to create D2 Media, an addressable platform specifically and solely for political advertising — so media partners are recognizing the needs of political advertisers and impact of political advertising on their revenue streams.
Lyons: With hundreds of choices in national cable and hundreds upon hundreds of stations to choose from, the availability of inventory is a benefit to this group of advertisers. In addition, the finer targeting offered by this expansion helps political advertisers refine their message to specific target groups.
Merrill: Outside of their capacity to reach every household with a television, network and cable providers now have the added benefit of portable applications, and so too will the people who pay to advertise with said providers.
An estimated 80 percent of Americans have mobile devices, almost every one of which has online capabilities. Penetrating the smartphone market gives political advertisers the ability to broadcast to a much larger market. Think about it: anytime someone watches a program on their phone or tablet, they will be subjected to paid commercials that could widely push the agenda of political campaigns. They have literally found a way into the hands of nearly every American with a cellphone. In fact, the only advertising medium that can come close to that kind of reach is television.
There’s no questioning the reach cable providers have granted politicians. However, 2016 will be the year political campaigns are more precise. It is much easier to measure the responses of digital and mobile marketing campaigns. That said, they have the ability to geo-target any prospects they want. The reach of a campaign is no longer as important as its targeted demographic. It’s entirely possible to market to a smaller group of people and expect better results if the people you are marketing to are more receptive to what you are saying. Of course, I am referring to targeted advertising. Cable providers will allow politicians to strategically place adds in front of a more receptive audience based on their individual inclinations. That way, their marketing dollars can go a lot further.
As if that wasn’t enough, studies have proven that political ads really do have a short-term effect on their audience. It is, therefore, more important than ever for politicians to continually “remind” voters that they are still in the running, and mobile television apps are the perfect way to do so. They offer a staying power unlike any other medium — one that keeps those that are running for office just a few button pushes away.
Stacey: While the expansion of TV/cable networks may allow one to better target a specific audience, it also means more work for the marketer, as different messages may need to be crafted to best appeal to different audiences.
Yallen: It has been a mixed blessing. While the additional networks enable a political advertiser more options with which to “buy around” airtime considered too expensive for their budgets, they have also resulted in further dilution of the already-fragmented viewing audience. As a result, it is becoming increasingly more difficult to reach the desired viewer with sufficient frequency.
Conversely, these additional vehicles have increased an advertiser’s targeting capabilities. Over time, cable networks have evolved; similar to magazine and radio formatting did previously, to serve targeted, niche audiences. In many of these cases, their core viewers closely reflect clear-cut party affiliations and candidate preferences. As a result, these networks have become a highly accurate — and preferred — method for political advertisers to deliver specific messages to their target audiences.
Additionally, the data gleaned from set-top boxes, and providers like comScore, is being increasingly mined to further define — and isolate — the viewing patterns and preferences of target voter groups.
How are political issue advertising and non-profit advertising — a staple of performance-based marketing efforts — similar? And different?
Koeppel: Not-for-profit advertising often uses a more aggressive CTA, usually in the form of asking for financial support. Commercials currently on the air for the Shriner’s Hospital and the ASPCA are good examples. Political issue advertising is asking for support in the form of a vote and/or advocacy, and the latter can lead to financial support. Therefore, political issue advertising is more of a two-step or less direct way of raising money for a specific initiative.
Lee: They have a similar “ask,” which is for viewers to take a strong action — donate, letter writing campaign, vote, etc. So they are very much playing on the viewer’s emotions to stimulate this action.
They differ in the sense that not-for-profit is typically looking to create a brand and drive long-term/continued donations — staying on the air with some sort of continuous presence. Meanwhile, political issue advertising is concentrated over a short window to impact a vote or some select event.
Stacey: They are similar in that they want to see results for their budget but different in the objectives they are trying to achieve.
Yallen: Election advertising relies on voter sentiment and preference, trends that are measured daily and — sometimes — even on an hourly basis. As a result, they are, at their core, performance-based campaigns.
However, in recent years, political advertising has leap-frogged product and lead-gen marketing in terms of applied data science, namely in the adoption of personality- and profile-driven media targeting that is linked to set-top box analytics, like comScore/Rentrak.
The never-ending need to respond to dynamic news cycles means that political consultants and buying agencies will probably be the first to adopt real-time platforms as they roll out their campaigns.
Recent estimates put advertising on NBCUniversal’s Summer Olympics programming at more than $1 billion during a 2.5-week period. How will this change how performance-based marketers look for inventory during that timeframe?
Abusaleh: Inventory is going to be tight in both long-form and short-form. The Summer Olympics have a much bigger impact on response than the Winter Olympics. Running in the counterprogramming on non-NBCUniversal networks can be hit and miss. As a rule, it’s best to avoid running against the primetime rebroadcast, and it’s important for agencies to set performance expectations for clients. If past performance is indicative of future performance, it could be a challenging 2.5 weeks.
Garnett: During the Olympics, media buyers typically are forced to shift monies around to maintain budgets. I expect we’ll see the same this year and see some who plan to reduce spend during that time. The reality is that NBC has to maintain high prices for inventory in order to recoup as much of its spending as it can.
The performance-based media impact from the Olympics will be more evident on the cable networks than on the broadcast networks since that’s where we tend to spend the most money.
Koeppel: The London Olympics in 2012 were the most watched television event in U.S. history, and there is no reason to believe that the trend won’t continue — especially given what is going on in the world geo-politically. Given that, some advertisers will choose to lay low. Those that will advertise should seek significant discounts, given the acute competition for eyeballs and the inherent risk during this period.
Lee: We typically have a large arsenal of properties that we air for each of our clients — so while we might be locked out of a handful of networks for a short window, there are several other options to air. Additionally, we have also accounted for this event in our annual client budgeting process and have slightly reduced spends planned for these weeks given the influx of dollars going to the Olympics. We also know viewership patterns change, so we want to focus on our best performing media tactics to ensure efficient results can be maintained during this window.
Lyons: While there will be some effect in terms of inventory availability, the market is deep in terms of choices — and the performance-based marketer will be able to achieve success as they have during countless similar big events that have occurred over the years. What we have always seen in the performance-based space is excellent ability by marketers to adapt to the changing landscape.
Stacey: You can’t play if you can’t pay. DR campaigns are accountable for results and when costs rise, you go elsewhere or wait it out until rates become feasible again.
Yallen: While most performance-based marketers do not traditionally rely on NBCU properties to generate leads, it will still have a cascade effect on the overall inventory situation.
The most-likely scenario is that many general advertisers — who do rely more on these properties — will need to shift portions of their buys to other networks. This in turn will preempt DR advertisers, who will be forced to shift away from some preferred performance-based vehicles, and search out alternate opportunities.
Also with respect to the Olympics, this dynamic will impact many local market campaigns that traditionally rely on the NBC affiliates and cause a substantial spillover effect as advertisers transfer their schedules to other stations in these markets.
With insight and leadership, Kristen Gasior shared the stage with VistaPrint and Wix to enlighten participants at Response Expo this past May. The session, “Using offline Media to Drive Consumers Online” brought great thought to the idea of using DRTV, Radio, Print and OmniChannel initiatives for inspiring consumer touch to purchase.
THOR has been using DRTV as a halo to drive unique visitors online with all of it’s campaigns; Balsam Hill being a great client and successful case study.
Repost from ERA BLOG: The ladies of DRTV kicked off the 2002 ERA Annual Conference & Exposition (now the ERA D2C Convention) with a general session that highlighted the entrepreneurial spirit of the direct response industry. Their session titled “Get in Touch with Your Feminine $ide” showcased the women executives who shared their insights about marketing to women, and identified key trends impacting the industry.
Thomas Haire nailed it in the article, “Entering the Omnichannel Era” in this month’s Response Magazine. For those who haven’t read the article, http://www.response-digital.com/response/201501#pg34 – please do. Nothing is more important than touching the consumer!
The THOR team attended the Consumer Engagement Show on November 5, 2014 and was pleased with the information garnished from Keynote Speaker, Ryan Craver. Essentially Ryan commented on the fact that Customer Service is the ever-changing 800-pound gorilla as a result of consumers using social media to post displeasure rather than call a TFN with complaints. Global is local with online social media, and consumers are seeking anything On Demand with Instant Gratification. As a result, the 2014 Disruptive Trends for consumer engagement are:
• Channel irrelevance
• Social Commerce: consumers now spend at least 37 minutes per day on social media sites, forcing Personal Sharing and News to move toward accelerated integrated commerce sites
• Beacons – eCommerce is not age specific and beacons are now in place to do the heavy lifting for acquiring data in the retail online experience
mCommerce will grow157% by 2018; mobile has arrived as a driver with gaming and messaging apps. Mobile is slowest to adapt to shopping online as app specific. Stickiness and cost of acquiring loyal consumers will push the industry and force apps on mobile devices to be more retail driven.
In the past, TV was the leader for advertising. In 2014 digital “eyes” ranked at 50% and TV lagged behind with 41% viewership.
“Adopt innovation as a corporate wide virus” was the key statement from Ryan as he urged marketers to follow Mark Suster on Twitter and allow innovation to be the key performance indicators for future engagement.
Great article highlighting our Client, neweraHD’s “Gallery Direct” division:
It’s fantastic when a Strategic Audit becomes a Roadmap for success.
Read the informative and insightful article in August’s Electronic Retailer written by Lori Zeller, Managing Partner of THOR Associates:
At the end of the day I ponder the use of “words” as many of our campaigns require “wordsmith” capabilities extraordinaire. And what has occurred to me recently is that direct response marketing has truly become a branded commodity. Not only does it require a “multi” channel integrated strategy, our marketing savvy must reach globally and the multi or many verticals are now “omnificently” able to have a tremendous reach.
The effectiveness of the touch, however, requires a “relationship”. That relationship is based on frequency. It’s based on “personalized marketing”. It’s based on impulse.
Hey, if it’s business it is personal. Effective marketing that result in AOV and Lifetime Value metrics for a robust ROI need to be taken personally by the marketer and delivered to the consumer for a “lucky winner” feeling.